Bloomberg News

Australia Home-Loan Approvals Rise by Most Since March 2009

June 07, 2011

(Updates with comment from economist in fourth paragraph, currency in fifth.)

June 8 (Bloomberg) -- Australian home-loan approvals rose in April by the most since March 2009, the first increase in financings this year, as the central bank extended a pause in raising interest rates.

The number of loans granted to build or buy houses and apartments gained 4.8 percent from March, when they fell a revised 1.1 percent, the statistics bureau said in Sydney today. That compares with the median estimate for approvals to rise 2.8 percent in a Bloomberg News survey of 20 economists.

Reserve Bank of Australia Governor Glenn Stevens held the benchmark rate at 4.75 percent yesterday after boosting borrowing costs seven times from October 2009 to November to prevent a property-market bubble from forming in a nation where more than two-thirds of households own their homes. Prices declined in the first quarter by the most since 2008 as floods in the nation’s northeast disrupted the property market.

“The result is a function of the rate reprieve since November,” said Michael Turner, an economist at RBC Capital Markets Ltd. in Sydney who forecast a 5 percent gain. “The details aren’t fantastic, but it’s still encouraging to see the series stabilizing after three monthly falls.”

Local Currency

The Australian dollar was little changed after the report, trading at $1.0660 at 12:10 p.m. in Sydney from $1.0675 just before the release.

The total value of loans rose 3.8 percent to A$19.8 billion ($21.1 billion) in April, today’s report showed.

The value of lending to owner-occupiers gained 6.3 percent, the report showed. The value of loans to investors who plan to rent or resell homes dropped 1.6 percent.

First-home buyers accounted for 15.8 percent of dwellings that were financed in April, down from 16 percent in March and lower than 16.9 percent a year earlier, the report showed today.

An index measuring the weighted average of prices for established houses in eight major cities slid 1.7 percent in the first quarter from three months earlier, the biggest fall since the third quarter of 2008, a government report showed May 2. There was a decrease in transactions in Queensland’s capital, Brisbane, it said.

--With assistance from Daniel Petrie in Sydney. Editor: Brendan Murray

To contact the reporter for this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang in Singapore at sphang@bloomberg.net


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